Today is the final article in our series on building a business case. We began the series by reviewing some of the basic metrics professional service firms use to track the progress of their business. Over the next three articles, we showed that these metrics can be improved through the use of professional services software solutions. Today, we are going to finalize our discussion by showing a Return on Investment (ROI) calculation.
Before we get into the details of the ROI calculation, it might be helpful to discuss the basic outline of a business case. A well-crafted business case will, at a minimum, contain the following segments:
Since Bi101 is a service organization and strongly believes in helping our customers, we think it would be useful to walk through each of these segments in regards to building the business case for a professional services software solution.
The problem – Although every firm faces different problems, there are some universal difficulties that all growing professional services firms encounter. For example, scalability is a common problem at growing firms. In the early stages, most managers are content to use the cheapest solution available which results in the frequent use of spreadsheets to track resources and perform accounting procedures like revenue recognition. However, spreadsheets are not scalable. The lack of scalability due to the use of spreadsheets can quickly become a pain point for growing firms.
Solution to the problem – Assuming that the overall goal of the firm’s managers is to continue to grow the business, the best way to solve the spreadsheet problem is professional services software solutions. Our recommendation would be a service like NetSuite’s OpenAir.
Ramifications of the solution – The beginning of this section should layout the various costs associated with the professional services software solutions. These costs may include subscription fees, implementation costs, and training costs. The second part of this section should describe the business benefits that will be gained by implementing the solution. As we have noted in posts 2, the benefit of resource management software is increased utilization. As we noted in post 3, another benefit of professional services software solutions is reducing the amount of time spent on administrative duties by automating processes. Within post 4, we showed that through the use of business intelligence, firms can increase their profit margins. All of these benefits are quantifiable and are gained when firms implement professional services software solutions.
ROI obtained – Finally, the business case should note the ROI calculation. This calculation was created assuming the subscription costs for the system was $50,000 a year and an additional implementation cost of $25,000. The system was implemented at a firm consisting of 50 consultants all billed out at $100 an hour, and an 8% weighted average cost of capital.
This concludes our series on building the business case for professional services software solutions. If you are in the market for professional services automation software, we would like to continue the discuss with you. Please contact us.